At the moment we can assess the activity in the USA’s oil market by studying how many drilling rigs are at work. In November 2014 activity was very high and the number of rigs actively drilling was approaching 2000. When the price of oil crashed so did the number of rigs. Now the decline in rig number is slowing and in the last week there were only 6 rigs that ceased activity. Now the number of active rigs is down at 888 which is 1,032 less than at the end of November. During the oil price crash of 2008-9 the lowest number of rigs active was 876. The question now is whether the current number of active rigs will go below that minimum.

The decisive factor in the decision of whether or not to drill is the WTI crude oil price. In the figure one can see that the WTI price was lowest in March and since then the price has slowly begun to rise. It is now approaching $60 per barrel. Earlier it has been said that a price of $70 per barrel is required for fracking to be profitable and if the current trend continues then the price should exceed $70 before July. Those that believed that the oil price would remain low for an extended period may be disappointed.

The total production from the seven largest US shale oil areas, Bakken, Eagle Ford, Haynes, Marcellus, Niobrara, Permian and Utica is expected to continue to decline. In June the fall in production is estimated to be 86,000 barrels per day compared with a total production level in May of 5.6 million barrels per day. If the price of oil rises further companies will start to frack those wells that were bored but not completed as they waited for higher oil prices. It will be interesting to follow these developments and to see whether or not we have passed the peak of oil production from fracking in the USA.